"Instead they continue to fall back on the same old tired excuses they have
been churning out for the past three years.

"Hunter Water persists in its reliance on unrealistic drought risks. The
response has again failed to account for the use of water restrictions and
demand management to cope with any future short term pressure on supplies.

"The utility is trying to create panic over water shortages to justify
building their favourite project.

"A series of 'commitments' such as a possible national park and water
releases are nothing new. Hunter Water has packaged up its legal and
administrative obligations as concessions.

"The promise of 2.5 billion litres of water released into the Williams River
does not disguise the harsh reality that Tillegra would take flows of 60
billion litres a year from the Williams and Hunter River and the estuary.

"The re-engineering of Seaham Weir was always necessary and will do little
to keep the estuary and lower Hunter River alive.

"The community will not be panicked into accepting this dam and the Keneally
government should join them in rejecting the excuses and concessions.

"Hunter Water has broken faith with its obligation to serve its community.
It has reverted to being an old-fashioned engineering-dominated bureaucracy
with a 'build at any cost' mentality.

"The response to submissions is misleading and dismissive. The Keneally
government should reject the dam," Dr Kaye said.

For more information:    John Kaye 0407 195 455

• “…a significant threat to the Hunter estuary and wetlands due to a reduction of freshwater flows from the Williams River” and
• “…significant long term effects on estuarine processes and productivity, with flow on impacts to the commercial fishing industry that relies on the estuary as a breeding and nursery area for its pr oduct.”

 The November 2009 submission also raised the spectre of compensation for financial losses that would be suffered by fishers and prawners.

The stinging indictment of the dam’s impacts on the Hunter Wetlands will put even more pressure on Federal Environment Minister Peter Garrett to reject the dam.

Background

In early September 2009 Hunter Water released a nine volume Environmental Assessment Report (EAR) as a critical step in the Part 3A planning process for the Tillegra Dam proposal. During the subsequent two month consultation period, relevant government agencies made submissions to the Department of Planning.

The consultation period closed on 13 November and the Department of Planning is currently assessing submissions and preparing a report that will be sent to both NSW Planning Minister Tony Kelly and to the Federal Environment Minister Peter Garrett.

Earlier media stories revealed that official submissions from two government agencies[1] criticised the EAR, including unsupportable planning assumptions and unacceptable environmental impacts.

While Hunter Water and the Keneally government have attempted to dismiss these as minority voices within the agencies, it is increasingly clear that the dam faces widespread opposition from senior public service experts.

The Department of Investment and Industry submission

While submissions to environmental assessments in NSW are not made public until after the application has been determined, a Greens call for papers motion passed by the NSW Upper House late last year forced the Keneally government to provide the official submission of the Division of Primary Industries, Fishers Conservation and Aquaculture within the Department of Investment and Industry (II-NSW).

The document, signed by Division Director Bill Talbot, shows that yet another government agency weighed in officially with stinging criticism of Tillegra.

This submission warned that the dam would have potentially catastrophic effects on the fish and prawn industries that depend on the Hunter River estuary as a breeding ground and nursery.

It also raised issues relating to the impacts on recreational fishing, fresh water fish species, clear breaches of several NSW government policies and acts including the Fisheries Management Act and misuse of climate change data by Hunter Water resulting in an underestimation of impacts on the Hunter estuaries.

The response also raised major concerns about: the lack of clarity in relation to filling time of the dam and the potential effect on the river due to drought effects and the long term future of the William River.

Impacts on the fishing and prawning industry

The submission raised specific concerns about the impacts of withholding freshwater that currently flows into the estuary from the Williams River but would be impounded and diverted by Tillegra.

II-NSW contradicts (p. 3) the EAR’s assertion that “the Williams River accounts for less than 3% of the total volume of water below the confluence of the Williams and Hunter Rivers,” pointing out that in fact the Williams provides “more than a quater of the freshwater inflows to the estuary on average.”

The submission identified the impacts of reducing freshwater flows (p4) including increased salinity, the intrusion of predators and parasites, decreased inputs of nutrients used by estuary species, increased frequency of benthic anaerobic conditions[2] and the loss of species and economically important seafood harvests.

The submission was unequivocal on the impacts of this loss of freshwater flows to the estuary, sited at 35% over the long-term (p. 4):

“The Department is not convinced by the EA's findings that a reduction of the freshwater inflows to the estuaries by up to 35% over the long term could not have a significant long term effect on estuarine processes and productivity, with flow on impacts to the commercial fishing industry that relies on the estuary as a breeding and nursery area for its product.”

“Specific studies on the Hunter River prawn populations showed significant links between the prawn catch and the influence of rainfall events and freshwater inflows to the estuary (Ruello,1973). This is of particular concern as the larger flows that the prawns rely on are the same flows that the dam is designed to trap, particularly with the proposal to maximise air space within the dam and reduce significant spills.

The submission also raised the spectre of financial compensation for prawners and fishers for the loss of their livelihood because of the damage done to breeding and nursery grounds by the dam (p. 4).

“If approved, the Department would therefore request a condition of consent that would require Hunter Water to monitor and model prawn catches and commercial fish catches in the Hunter River and offshore fisheries reliant on Hunter prawn and fish species, to determine the level of impact on the commercial fishing sector from the project. This would also be seen as equitable treatment compared with the compensation of farmers for losses as noted in the Draft Soc (s.4.10).”

 II-NSW raised concerns about the length of time it would take to fill the dam and the effect this would have on the estuary and the possibility of significant fish kills (p. 5):

“The Department also has significant concerns in relation to the quality of water (s.10.5) that will be discharged during the filling stage. There will be significant die off of vegetation and associated release of methane, carbon dioxide and nutrients into the water. The Department is concerned that any water released during this period may have excessive nutrients potentially causing algal blooms, changes in pH and increased Biological Oxygen Demand which can cause significant reductions in dissolved oxygen. If approved, the Department requests that any conditions of consent ensure that monitoring of water quality is undertaken during the filling phase in order to avoid the potential occurrence of poor water quality resulting in fish kills.”

II-NSW also raised concerns that the situation could become worse in the longer tem (p. 5):

“As the demand for freshwater for the Central Coast and Upper Hunter increases, the potential to extract more water and not introduce more stringent water use rules put the future of the river, its habitats, downstream fishing industry and other users at risk.”

Media Comments

Greens NSW MP John Kaye

Dr Kaye said: “The future of an industry that supports hundreds of working families and provides the state with an important food source is being put at risk for a dam that is unnecessary.

“Hunter Water have copped a bucketing from yet another government agency. The Industry and Investment department has officially criticised the utility for inadequate climate change data and grossly under-estimating the impacts of Tillegra on the fish and prawn populations.

“Hunter Water and the state government cannot slide out from this one with claims that it is a minority internal opinion. This is the official advice submitted to the Department of Planning.

“Nor can they claim that this is not unusual. There is nothing normal about a government department accusing another agency of misleading the public and putting at risk the future of an entire fishery.

“Federal Environment Minister Peter Garrett is going to have a hard time ignoring this report.

“He can’t just cast aside the criticisms of the data or the impacts on fish and prawn populations.

“The submission presents a litany of Hunter Water’s failure to properly assess the impacts on then environment and the fish and prawn industries.

“The government’s own fisheries department is warning that approving the dam would at best be playing Russian roulette with the future of the environment and the industry. On their evidence, it is almost certain that  Tillegra would cause a massive decline in the viability of the fisheries and untold damage to the Hunter estuary.

“It is now clear that there is a widespread revolt against the dam in the public service.

“The government’s own experts are not prepared to sit on their hands and allow the dam to be built at the expense of rate payers, the environment and the local prawn and fishing industries,” Dr Kaye said.

For more information: John Kaye 0407 195 455

Fishing Industry Comments

Geoff Hyde, Commercial Fisherman, 50 years experience in the Hunter Region

Geoff Hyde said: “Freshwater floods, known as freshes, are vital to the health of the lower Hunter River, and the valuable input from the Williams Rivers. Together with the Paterson River, the Williams contributes 35% of input into the Hunter River system. This is a substantial amount, and it’s not adequately addressed in Hunter Water’s EAR.

“Freshwater floods are one of the most important factors of a healthy, productive river and greatly impact the prawn catches. This season has been poor in both king prawns and school prawns due to the dry conditions and lack of freshes. The proposed dam will stop all freshes from flowing down stream into the estuary and will have a devastating impact on not only the local prawning industry, but regional fisheries. King prawns tagged in the Lower Hunter estuary have been found to travel as far north as Moreton Bay.

“A dam the size of the proposed Tillegra Dam will devastate the lower reaches of the Williams River, affect the lower Hunter River extending to the estuary with flow on effects to the local fishing economy. 

“Riverine flooding is a natural process and is vital in maintaining healthy waterways and fish and prawn stocks. The construction of another dam on the Williams River will result in a dramatic impact on river health with severe ecological consequences,” Geoff Hyde said.

For more information: Geoff Hyde on 4920 1211, 0421 948 252

Brad Warren – Executive Chair, Chair of Ocean Watch

Brad Warren said: “The majority of seafood species people are familiar with on their dinner plate spend a significant part of their life cycle in our river and estuarine systems. The proposed Tillegra Dam, by changing the natural flow of the Williams River, will have undoubted impacts on the production of prawns, oysters and fish so highly regarded by our local community.

“The proposed Tillegra Dam, by changing the natural flow of the Williams River, will have downstream implications for the production of seafood and the business and recreational activities that flow from the communities access to those resources.

“A healthy natural environment underpins the production of seafood.  Interference with the natural flows of the Williams River by the proposed Tillegra Dam will have downstream impacts  in the Hunter River estuary, which will result in the reduced ability of our natural systems to produce the seafood that is such an important part of a healthy diet,” Brad Warren said.

 Note: Ocean Watch Australia Ltd[3] is a national environmental, not-for-profit company that works to achieve sustainability in the Australian seafood industry by protecting and enhancing fish habitats, improving water quality and advancing the sustainability of fisheries. OceanWatch Australia receives a portion of its core funding from the NSW seafood industry.

Fore more information: Brad Warren on Mob. 0412 606959

Faulty directive to the Pricing Regulator

In July 2008, then Water Minister Nathan Rees used his power under section 16 A of the IPART Act, to prohibit the Independent Pricing and Regulator Tribunal (IPART) from considering whether alternative options other than Tillegra would result in lower household costs.

In effect, IPART was being forced to pass the costs of Tillegra through to consumers, regardless of the need for the dam or the existence of other lower-cost water supply options.

A technical flaw in Minister Rees’ original directive caused his successor, Phil Costa, to seek urgent advice from his department[1] about redrafting the order.

Senior water policy experts used the request for advice to express their outrage at Hunter Water’s abuse of the evidence to justify the dam.

They also advised the Minister to ‘defer reissuing the directive’ and instead to meet with the regulator to discuss a draft report from consultant Sinclair Knight Mertz that subsequently proved to be highly negative. 

Documents obtained by a Greens motion in the NSW Upper House have uncovered an email trail in early November 2008. You can view the documents here.

The email trail

On 4 November 2008, the Senior Manager, Metro Water Policy, Metropolitan Water, Katy Brady, wrote to her Assistant Director Ben Taylor suggesting that their department put a secret submission forward highlighting the problems associated with Tillegra Dam.

Ms Brady expressed her hope that a more rigorous analysis of Hunter Water Corporation’s (HWC) modelling for Tillegra Dam would lead to a government decision to depart from the ‘direction’ to build it.

In addition, Ms Brady had serious concerns about the public’s ability to pay for Tillegra Dam with the rising costs in living. 

By 13 November, Ms Brady and Mr Taylor had signed a response to the Minister’s request for advice. There is evidence that this document or an earlier draft was in the possession of Louise Whiting in Minister Costa’s office who appears to have forwarded it to others asking then to “check this and send up the line urgently”.

The ministerial advice

The document signed by both Ms Brady and the Assistant Director used the opportunity to raise three major criticisms of HWC’s case for Tillegra:

• Impacts on customer bills

• HWC’s use of “very conservative assumptions regarding climate change impacts which have been superseded by 2008 analysis indicating that runoff in the region my increase, not decrease” and
• HWC’s “very conservative approach to estimating” the amount of water that can be extracted from existing water supply infrastructure

The Department took the extraordinary step of including a detailed analysis of their ‘serious concerns’ (Tab D) and suggesting that the Minister should not reissue the directive because that would imply endorsement of the assumptions on which HWC relied to mount their case for Tillegra.

Ms Brady and Mr Taylor were taking the extraordinary step of telling the Minister that he should no longer trust Hunter Water and should not be seen to be endorsing their planning.

The effect of their advice would have been to stop the regulator considering the dam and hence Tillegra would have been on hold while the Minister consulted.

It appears that the Minister subsequently ignored the advice.

Background

The NSW government has already been embarrassed by scathing official criticism from four of its own agencies regarding the Tillegra Dam proposal in their November 2009 responses to the EAR.

These include the NSW Office of Water (NOW); the Hunter-Central Rivers Catchment Management Authority (CMA); the Department of Environment, Climate Change and Water (DECCW); and NSW Department of Industry and Investment’s (II-NSW).  Some criticisms include:

• clear breaches of several NSW Government Department Policies and Acts
• misuse of climate change data and yield
• inaccurate data in relation to effects of population growth
• lack of a proper socio-economic assessment and assessment of impacts on the local Hunter community
• inadequate data on the loss of freshwater flows to the estuary
• inadequate data on impacts on the environment including the Federal protected Ramsar wetlands
• loss of aquatic habitat and impacts on the fish and prawn productivity
• alternative options to Tillegra Dam not being properly investigated

Media comment

Greens NSW MP John Kaye said: “As early as November 2008 the NSW government’s own water experts were telling them that Hunter Water’s case for Tillegra was seriously flawed. The Minister was advised to use a technical defect in the direction to effectively put the project on hold.

“For the next 15 months the Rees and Keneally governments dithered over the future of the dam that their own water experts told them was not needed, expensive and damaging.

“The Keneally government is fast running out of time to stop this dam. For 15 months they have sat on official advice signed by the assistant Director of the Department of Water to put it on hold. It is now urgent they act on it.

“In November 2008, Water Minister Costa was warned by his own department not to parrot the case coming from Hunter Water.  He was told of serious flaws and given advice to not endorse the planning assumptions.

“Despite this warning he has continued to support the dam with arguments that he was told would not withstand scrutiny.

“The case for Tillegra has been exposed yet again as flawed and deceptive. The Keneally government cannot continue to rely on Hunter Water when its own Assistant Director of Water has told them that they should not endorse the planning assumptions.

“Then-Premier Nathan Rees came close to doing the right thing during the 2008 mini-budget process but lacked the political clout within his own government to pull it off.

“It is now clear why the NSW government was not surprised by the stinging criticism of the dam in their own departments’ November 2009 responses to the Environmental Assessment. Twelve months earlier, two of their most senior bureaucrats had officially advised the Minister to put Tillegra on hold,” Dr Kaye said. 

 For more information: John Kaye 0407 195 455

Sally Corbett, No Tillegra Dam Group said: “Hunter Water has failed in its job to consider the needs and wants of the Hunter community. The Keneally government must now rein in the water authority, tell it to check its figures and check in with the community on the level of service it wants and wants to pay for.

“Tillegra Dam was foisted on the Hunter community without proper consultation.  Rees saw the writing on the wall before his demise.  It is now time for Premier Keneally to take notice of the Hunter community and can the dam.

“Now is the time for Jodi McKay, member for Newcastle and Minister for the Hunter, to show she truly represents the Hunter community. She must go straight to Macquarie St and tell Premier Keneally to immediately stop the Tillegra Dam Environmental Assessment  process, and put an independent inquiry in its place.

“If the Hunter community does wish to increase its drought security beyond the current level, then this should be the subject of genuine community engagement and there should be a transparent analysis of all available options and their relative costs and benefits,” Ms Corbett said.

 For more information: Sally Corbett on 0403 892 093

The 2006 Sydney Metropolitan Water Strategy indicated that construction on a 500 ML/day desalination plant should be commence when Sydney’s storages fall below 30 per cent.

In 2006 NSW Premier Morris Iemma panicked when the levels fell to 34 per cent and commenced planning, contract letting and construction of the plant, even though water storage levels have remained consistently well above 30 per cent.

With storage levels currently about 50 per cent, a rerun of the last ten year’s rainfall, including the long drought and appropriate water restrictions, would almost certainly have seen water levels remain above 30 per cent without the additional water from desalination. Additional water management measures would allow for at least fifteen years of repeated weather conditions.

Higher rainfalls could mean the plant is not needed for the foreseeable future or ever.

Sydney pays for Iemma’s mistake: The opportunity cost of a panicked decision

Residents and businesses in Sydney, the Illawarra and the Blue Mountains are now required to pay for the $1.9 billion cost of the plant and the connecting pipelines to Sydney’s eastern suburbs, even though the plant is unnecessary. Bills have been increased to cover the capital costs.

Each year of unnecessary desalination incurs an opportunity cost [1]  on $114 million dollars. This is money that could have been used for other purposes by households, businesses or Sydney Water if the expenditure on desal had been delayed until it was required to maintain supply security.

Once the plant is constructed, it is required to be operated for two years for technological proving, costing [2] about $90 million. Each year that the plant was built before it was needed incurs an opportunity cost [3] of $5.4 million.

A ten year early decision would incur a total opportunity cost [4] of $1.194 billion.

The table below shows the holding costs associated with the decision if it proves to have been 5, 10 or 15 years too early.

Adding insult to injury: the costs of unnecessary operations

Decisions about when to operate Sydney’s desal plant will have to be made in the near future and the battle is on for Veolia to maximise its profits.

For two years, the Kurnell 250 ML/day plant will be operated at full capacity (for about 300 days/year) as part of technology proving.

After that, it will be dispatched as part of Sydney’s suite of water management options, which include the dams and setting and releasing water restrictions.

In the past, the NSW government and Sydney Water have tried to justify the running of the plant on the basis of cost, suggesting that water from Kurnell desal  would be comparable in price to water from the Sydney Catchment Authority (Warragamba etc.). This is incorrect.

In a December 2009 Sydney Morning Herald article [5] , Sydney Water managing director Kerry Schott maintained that the plant will be run at a ‘pump mark’ [6] well above 40 percent. The article suggested the corporation would seek a 70 percent threshold.

According to the Metropolitan Water Plan (as at 2006), a 500 ML/day plant built when dam levels reached  30% would have kept Sydney out of trouble, allowing about 2 years to build the plant and the connecting tunnels under Botany Bay.

In the event, a plant of half that capacity has been constructed at 250 ML/day.

Not operating that plant until water levels had reached 30% (or even 20%) would still provide more than adequate levels of water security for Sydney because:

• the construction of an additional 250 ML/day desal would take less than 6 months (given that the most time consuming part of the process, building the tunnel, is completed. Note that the existing tunnel was built to handle 500 ML/day), and
• operating the existing 250 ML/day after levels had fallen below 30% would in fact provide even more buffer, suggesting that 30% is conservative.

Running the plant when it is not required to secure Sydney’s water supply incurs a $45 million a year cost [7]. If the decision proves to have been ten years too early and the plant is thus run for 8 years unnecessarily, then the squandered opportunity cost will be 8 years x $45 million/year = $360 million. On top of $1,193 million capital holding cost, the total bad decision impacts on Sydney households and businesses will be $1,554 million.

The proposal to run the plant when it is not needed will:

• boost profits for Veolia who are paid both a holding cost and a per ML amount,
• push up bills for Sydney Water residents, and
• unnecessarily increase the environmental damage from the plant, including increased energy usage, squandering renewable energy, impingement and entrapment of marine life and saline plumes.

Note:
This analysis tends to understate the costs associated with the running of the plant.  Desalination operating costs have been set at 60 cents/kL which is on the low side of the expected range of 60 to 70 cents/kL.

John's Comments

Greens NSW MP John Kaye said: “The Keneally government is about to compound the myth that the desalination plant is needed by planning to run it whenever storage levels fall below 70 percent.

“Sydney households are already committed to a $1.2 billion penalty for Morris Iemma’s mistake in building the desalination plant too early. Kristina Keneally should not heap another $360 million on top of that by running the white elephant when it does not contribute to water security.

“After the proving period, the plant should be put on ice until storage levels fall to 30 percent or less.

“The running threshold should be determined by a rigorous analysis of water shortage risks, not by politics or favours for Veolia.

“If the Keneally government sets operation thresholds purely to cover up their previous mistake of building the plant, then Sydney households will be paying $360 million for the political convenience of the government.

“Rather than digging themselves in even deeper, the Labor government should admit their original error and put the plant on ice after the run-in period. 

“Veolia and its associated companies have a strong track record of donating to NSW Labor. Having boosted the party’s coffers by $58,590 over the last seven years, the desalination operator will no doubt be looking for a return on their investment at the expense of Sydney households.

“Running it now will not improve water security in any meaningful way. All it will do is make Sydney householders pay to boost Veolia’s profits, cover a previous Labor blunder and increase environmental impacts.

“The plant is a white elephant that will become even more expensive if Sydney Water and the Keneally government get away with a 70 percent threshold.

“Sydney households are already paying for the plant. They should not have to pay for unnecessary and wasteful operations that do not contribute to water security,” Dr Kaye said.

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References:

1. $1.9 billion at 6 percent per annum.
2. 60 cents/kL x 250 ML/day x 300 days/year x 2 years = $90 million.
3.  6% of $90 million = $5.4 million
4. 10 years x $114 million/year + 10 years x $5.4 million/year = $1,194 million
5. http://www.smh.com.au/environment/water-issues/desalination-wont-ease-water-restrictions-20091221-la29.html
6. Pump marks are the threshold levels of Sydney’s storages, principally Warragamba, below which the desalination plant is turned on.
7. 60 cents/kL x 250 ML/day x 300 days/year = $45 million.